Top findings from Q3 2016
“The economy is resilient enough — business as usual!” That’s how the president of a factory equipment manufacturer put it when we asked him to predict the ultimate impact of the elections. Like most private-company executives, he was taking the long view. So while the election season was the backdrop for our third-quarter survey, the year ahead was the focus of our questions to Trendsetter companies.
Their answers are worth hearing. That’s because what private companies say about their plans and perspectives is a good indication of where the economy as a whole is going, particularly in terms of economic growth, hiring, and wages.
So what should we expect? Tempered payroll increases over the coming months, steady but unspectacular growth, and continued spending. Leave it to private companies to keep a measured outlook even in the headiest of times. No wonder they’re the backbone of the US economy.
PwC's Ken Esch, Private Company Services Partner, discusses the Trendsetter Barometer survey and highlights key findings from US private companies in the third quarter of 2016. What we heard? Despite lowered expectations, private companies keep spending.
“I can’t see any changes happening to the overall economy.”
CFO, Educational software company
Trendsetter sentiment about the direction of the US economy is a good leading indicator of US GDP growth a year down the line. In this case, no news is good news:
The prevailing sentiment, however, is uncertainty.
“Despite a sluggish US economy, we have managed to grow our company through innovative approaches.”
President & CEO, Distribution and inventory management company
Private companies project revenue growth of 5.4% for the next 12 months.
Meanwhile, at 14%, the number of private companies expecting double-digit growth is the lowest we’ve seen in the decade we’ve been tracking this data point.
“More capital spending is what drives the industry for us.”
President/CFO, Vendor management, payroll services, and staffing company
Three-quarters of private companies are ramping up operational spending, suggesting that their feelings about the economy might not be as lukewarm as all that.
Inorganic growth, however, is getting the short shrift, with only 7% of Trendsetter companies planning to spend more on acquisitions — or planning acquisitions period — for the next 12 months: an all-time low.
“Finding talented people is of the greatest importance.”
COO, IT projects company
Trendsetter hiring plans for the next 12 months tend to be a one-year leading indicator of changes in US payrolls.
What have their plans been indicating lately?
Another leading indicator by one year is the average wage hike that Trendsetter companies plan to give workers over the next 12 months.
The good news?
“We’ve seen continued growth in China and Vietnam, and there are potential opportunities for expansion in Asia and the Far East. The US will remain stagnant with limited growth.”
CFO, Logistics and transportation company
While few private companies say they’ll expand sales operations into new foreign markets over the next year, they have no intention of scaling back in their established markets abroad.
And they’re earmarking funds for other growth-focused activities, too, such as R&D and new product introductions.